Skopje Tram, Investors Roundtable 18 January 2012

2 Agenda ■10:15 Opening words (speaker: Szabolcs Vona, Vialto & EC Harris) ■10.30Greeting participants by the Mayor of Skopje ■10:45 Introduction of Potential Investors (speakers of the respective companies – 5 minutes each ) ■11:45 Coffee break ■12:00 Introduction of the recent developments with Skopje Tram Project (speaker: Csaba Orosz PhD, Vialto & EC Harris) ■12:20 Questions and Answers ■13:30 Closing words, conclusions (speaker: Kristijan Gjorgjievski – Vialto & EC Harris)

Skopje Tram, Project Introduction Csaba OROSZ PhD |18 January 2012

Developments in the past year ■December 2010 – The City of Skopje engaged Vialto Consulting and EC Harris as consultants to do the following tasks: –Phase I - Preparation of a Study for a concession project for development and introduction of light railway system for passenger transport in the area of the City of Skopje. The study includes: Traffic - technical analysis Economic and financial analysis Legal analysis Possibilities for development –Phase II - Preparation of Tender Documentation and model contract, evaluation criteria and animation of potential investors; 4

5 Planned Tram Network (Feasibility Study 2007) Line 1 Line 1 alternatives Line 2 Line 3 Line 4

6 Proposed Versions

7 Selected Version Version 2a4 - Novo Lisice - Centar - Gjorce Petrov

8 Investments and Operational Cost Version 2a - Novo Lisice - Centar - Gjorce Petrov No.ItemUnitQuantity Cost per unit Total cost [1000 EUR] ABCDEF 1Investment cost 2Track infrastructuretrack km Catenarytrack km Depot (only at East, at Novo Lisice)each Vehicleseach Subtotal1000EUR Technical reserve1000EUR10% Provision for inflation1000EUR5% Provision for exchange rate1000EUR5% Total Investment Cost 1000EUR Operational cost ( per year ) 12Vehicles running (O&M) costkm Infrastructure maintenancetrack km Total Yearly Operation+ Maintenance Cost1000EUR 7 872

9 Estimated Passenger Flow (Option 2a4, Peak Hour)

10 Estimated Tram Passenger Flow ■„Corridor” approach (change to tram) –80% of bus passengers (80 pax per bus) –20% of car passengers (1,5 pax per car) ■Daily passengers assumptions –w = 15% (peak hour factor) –growth factor: 1% per year –diameter shaped lines ■Yearly passengers assumptions –250 workdays, 115 holidays –holiday = 0.5 × workday

11 Version 2 basic data Line num. TrackLengthHead- way [min] Servic e per day Present traffic Estim a-ted pax 1 Novo Lisiche – Centar – Gjorche Petrov 12 km 33 min bus 1301 car 1350 pax 44 bus 1139 car 3158 pax pax/workday ( ) × 2 / 0,15

Ticket revenues 12 ■ It is expected that the income from ticket sales at the first year of operation will be 12.7 M Eur per year plus 1.0 M Eur as a compensation for discounted tickets. Distribution among pass typesTram Annual tickets27,6% Student monthly32,0% Pensioner monthly3,1% Other monthly17,3% Single19,1% 10 rides0,9% Total100,0%

Public Subsidies ■Up to 10 % initial investment subsidy - selection criterion in the tender ■optimum operative subsidy/availability payment - selection criterion in the tender 13 Starting year Ending year Annual amount PV (million EUR) Ticket price: 1,0 EUR Operative subsidy I483.6 Operative subsidy II9351.1

Public Subsidies 14

Financial Indicators of the preferred option (2a4) 15 Financial Indicators (ticket price 1 Eur) Net present value 75,69 M Eur Benefit – Cost Ratio(BCR) 1,208 Net discounted profit (NPV – PV of equity investment) 60,16 M Eur Interest rate on equity 11,07% Total Subsidy PV 81,46 M Eur

The Study - Conclusions ■It is financially feasible to introduce the Tram as an environmentally friendly high capacity transport mode in the City of Skopje; ■Among line options investigated, Line 1 proved to be most beneficial and financially feasible (12km long trunk line); ■Later further development is possible (extension of line 1,additional lines 2 and 3); ■ Sustainable public subsidies needed 10 % initial investment subsidy optimal operative subsidy/availability payment ■Need for amendments in legislation, due to a introducing a new way of transport ■Additional measures: 1.Modification of local transport strategy. 2.Reorganisation of bus services 16

Next steps ■Analysis of the feedback from the round table and possible implementation of investors’ initiatives. ■Expected tender announcement – Q ■Contract Award - Q Pre- qualification 45 days Preparing Shortlist 15 days Tender Applications days Tender Evaluation 30 days

Questions and Answers

Closing Words, Conclusions Áron NEMES | 18 January 2012

Thank You for Your Attention!

21 PPP (DBFOT) Structure